Johnson & Johnson To Pay $2.2 Billion In Drug Marketing Penalties

Johnson & Johnson has agreed to pay more than $2.2 billion to settle criminal and civil claims that it marketed the antipsychotic drug Risperdal and other medications for off-label uses and paid kickbacks to a large pharmacy. The agreement, one of the largest health care fraud settlements in history, largely centered on Risperdal, an antipsychotic drug that Johnson & Johnson marketed to treat elderly dementia patients, as well as children with behavioral problems. The civil settlement also resolved claims related to Invega, a similar antipsychotic drug, as well as the heart medication Natrecor.

The pharmaceutical giant and its subsidiaries agreed to pay $485 million in criminal fines and forfeiture, and $1.72 billion in civil settlements with the federal government and several states. The agreement also requires the company to change business practices related to drug marketing. Attorney General Eric Holder, when announcing the settlement, had this to say:

These companies lined their pockets at the expense of American taxpayers, patients and the private insurance industry as they drove up health care costs and hurt the solvency of health care programs such as Medicare, U.S. The settlement also addresses allegations of conduct that recklessly put at risk the health of some of the most vulnerable members of our society — including young children, the elderly and disabled.

Risperdal was approved by the Food and Drug Administration (FDA) to treat schizophrenia. But in 2002 and 2003, sales representatives for Janssen Pharmaceuticals, a Johnson & Johnson subsidiary, urged physicians and others to prescribe the drug to treat symptoms such as agitation, hostility and confusion in elderly dementia patients. Sales materials emphasized those symptoms and downplayed any mention of the FDA-approved use. It was said in the criminal charges that company representatives received incentives for promoting the drug’s off-label uses.

Pursuant to its criminal plea, Janssen will pay a total of $400 million to settle the claims and plead guilty to a misdemeanor misbranding charge. In a related civil complaint, the Justice Department says that Janssen marketed Risperdal to control the behavior of elderly nursing home patients, children and people with mental disabilities. It was said that the company made “false and misleading statements” about Risperdal’s benefits and minimized the risks. The government repeatedly warned Janssen that marketing Risperdal as safe and effective would be misleading and that the drug posed an increased risk of stroke, among other “serious health risks” for the elderly. The company also downplayed or failed to publish studies that confirmed the dangers of the drug, according to the Justice Department’s report.

From 1999 to 2005, despite the FDA’s repeated warnings, Janssen created an “ElderCare sales force” that targeted nursing homes and doctors who treated the elderly in a campaign to promote off-label uses. During that period, the company told its sales force to market Risperdal to child psychiatrists and others to treat children with illnesses such as attention deficit disorder, obsessive-compulsive disorder and autism. The Justice Department says that Risperdal increased the risk in children of elevated levels of a hormone that can stimulate breast development, among other side effects. The settlement also resolves allegations that Janssen marketed Invega, another drug to treat schizophrenia, for off-label uses.

It was alleged that Johnson & Johnson and Janssen paid millions of dollars in kickbacks to Omnicare, the nation’s largest pharmacy, which caters to nursing homes, to induce it to promote Risperdal and other drugs in the facilities. It was contended by the Justice Department that Janssen also paid doctors “speaker fees” to get them to prescribe Risperdal. Under the agreement, the companies have agreed to pay a total of $1.39 billion to resolve claims related to off-label marketing and kickbacks for Risperdal and Invega.

The settlement also resolves claims that Johnson & Johnson and Scios, another subsidiary, improperly marketed Natrecor, which was approved to treat an acute form of congestive heart failure. Contrary to the approved use, Scios launched an aggressive campaign to persuade doctors and clinics to use the drug to treat less severe heart failure. Brian Stretch, first assistant U.S. attorney for the Northern District of California, has this to say:

This case is an example of a drug company encouraging doctors to use a drug in a way that was unsupported by valid scientific evidence.

The settlement will require Johnson & Johnson to abide by a five-year corporate integrity agreement. Under one provision, the company will have to change its bonus program to allow for recouping payments made to executives found to have engaged in misconduct. It appears that the company will also be required to be more transparent about research, publication policies and payments to physicians.